UI backtracks on paying Modern Piping, seeks documentation for work on Children’s Hospital

The University of Iowa and Children’s Hospital contractor Modern Piping dispute each other’s statements on whether documentation of work on the hospital has been provided to the UI.


University of Iowa President Bruce Harreld speaks in front of the state Board of Regents on Thursday, April 18, 2019.

Katie Ann McCarver, News Reporter

As the University of Iowa inched closer to settling its legal disputes over the Stead Family Children’s Hospital construction, the UI — with support from the state Board of Regents — accused construction company Modern Piping of playing games and said the university will not pay the remainder of its court-ordered arbitration award until it fulfills certain contractual obligations.

“I’ve kind of had it here,” UI President Bruce Harreld said at the regents’ meeting on Thursday. “I actually fully am prepared to pay what we owe them, but I also want in return the construction documents. This is not just a normal building. There are patients in this. There are kids.”

RELATED: UI pays nearly $4 million to keep Modern Piping off pharmacy-building construction

The documents, called “as-builts,” include information about the pipes, valves, and electrical wiring of the Children’s Hospital, and Harreld said Modern Piping has told the UI, within the last 24 hours, that it must provide additional $500,000 to $2 million before receiving them.

“As far as I’m concerned, that’s extortion,” Regent Larry McKibben said. “… I’m not about to have the regents at our universities start taking extortion from people.”

Harreld said the project budget also accounts for the remaining $17.9 million the UI owes Modern Piping, but payment will be withheld until the company provides documents detailing their construction work, per their contract.

“We need the drawings,” Harreld said. “Trust is wearing thin.”

McKibben said he completely agrees with Harreld and that he hoped his colleagues would stand up with him.

RELATED: Court rules in favor of Modern Piping

“It is non-negotiable,” Regent Sherry Bates said. “We have to have those as-builts.”

The regents approved the UI’s request to increase the Children’s Hospital project budget by $32.5 million on Thursday, boosting the revised project budget to $392.7 million to cover outstanding construction contracts and litigation claims to contractors Modern Piping and Merit Construction.

The regents allowed Harreld to explain university efforts to pay Merit Construction a settlement of $9.4 million in the next 24 to 48 hours, after an appellate court ruled in favor of Merit during a legal dispute.

As of 4:50 p.m Friday, UI spokesperson Jeneane Beck said in an email the wire transfer to Merit was complete.

According to a previous UI statement, the UI will have paid Modern Piping a total of $73.9 million after fulfilling the arbitration award. Merit Construction will receive an ultimate $63.2 million, and both companies received thousands in attorney fees and expenses.

RELATED: Iowa appeals court rules against UI argument in Modern Piping dispute

While Merit Construction has agreed to hand over its documents, Harreld said the UI is working blindly in the Children’s Hospital without Modern Piping documents, as well. Regents agreed when he expressed concern for pipe leaks, busts, and fire without a copy of the layout.

Harreld said the as-builts are necessary to apply for LEED certification for the Children’s Hospital and to protect patients at the Children’s Hospital in case of emergency.

“All of our contractors agreed to give us that documentation before they began work,” Harreld said. “We’ll pay Merit quickly, and then we’ll pay Modern as quickly as they commit.”

On the other hand, Modern Piping is demanding Harreld and the regents retract their statements.

In an email to The Daily Iowan, Modern Piping attorney Jeff Stone called Harreld’s statements false, and iterated the company’s stance that the UI has had every as-built since no later than April 26, 2017, and denied having asked for more money.

“Modern Piping offered a $126K discount and offered to cooperate with documents,” Stone said.

Stone said the offer of two pairs of Microsoft HoloLENS, which Harreld referred to in the regents meeting as an insult about using glasses to see inside the walls better, was a $6,000 cost Modern Piping was willing to incur to supplement the as-builts he said the UI already had.

“The University of Iowa lied to the Board of Regents in March 2017 about the UIHC project budget,” Stone said. “Bruce Harreld misrepresented the budget again in September 2018. Bruce continued his lies today.”

RELATED: Regents to consider UI Stead Family Children’s Hospital project budget increase

Stone said the UI is in possession of the as-built documents and has had every as-built since April 26, 2017. In his email, he provided an image of a “building information model” folder he said contained the as-built documents.

UI officials contend the university has received shop drawings rather than as-builts, providing an email exchange between construction firms Gilbane, Heery, and Modern Piping on Jan. 10, 2018 detailing what is still needed to approve as-builts.

Stone said Gilbane reviewed the as-builts in 2017 and 2018, and Heery accepted the as-builts in June 2018. He provided an image showing bid package 15 had been reviewed by the two construction companies at those times.

An additional email exchange the UI provided dated Friday, however, shows Heery confirming the corrected as-built drawings for bid package 15 have not been received.

Modern Piping CEO Ken Brown said in a statement that Modern Piping is disappointed but not surprised with Harreld’s remarks, “as this isn’t the first time President Harreld has been less than truthful with the Board of Regents.”

“The Board of Regents not only allowed but participated in a story, fabricated by University of Iowa senior leadership, which allowed them to avoid discussing accountability of the University’s mismanagement and waste of taxpayers’ funds,” he said.

Marissa Payne contributed to this article.